## Facts

- Charles H. Bayley died in 1928, leaving a residuary testamentary trust administered by a corporate trustee.
- The trust directed income payments to Bayley’s widow (including a guaranteed minimum net annual income) and smaller distributions to certain relatives and charitable annuitants.
- The trust was to terminate at the death of the last surviving life beneficiary; upon termination, the trustee was to fund specified charitable gifts and transfer the remaining corpus to the Museum of Fine Arts, Boston, in a permanent fund whose income would be used to purchase paintings and pictures.
- Over decades, the trust corpus grew substantially while required annual payments remained relatively small; by the time of the petition, the widow had died and only two individual life beneficiaries remained.
- All beneficiaries in being, including the charitable interests and the Museum as residuary remainderman, entered an agreement to:
  - reserve sufficient assets to increase payments to the remaining life beneficiaries,
  - enlarge certain charitable benefits, and
  - distribute a substantial portion of the corpus immediately to the Museum, before the trust’s stated termination event.
- The probate court found the trust was not a spendthrift trust and that accelerating distribution would not violate any restriction in the will; it also found economic changes (inflation and rising art prices) made postponement harmful to the Museum’s ability to fulfill the donor’s art-purchasing purpose.
- The probate court approved the agreement and ordered a partial termination and distribution; the trustee appealed to obtain definitive approval and protection in complying with the decree.

## Issues

1. Whether a Vermont probate court has jurisdiction and authority to order a partial termination and accelerated distribution of a continuing testamentary trust when the trust has not yet terminated under its terms.
2. Whether all beneficiaries, by agreement, may compel partial termination and acceleration of remainder interests when continuation is not necessary to carry out a material purpose of the trust.

## Decision

- The Vermont Supreme Court affirmed the probate court’s decree.
- The Court held the probate court had jurisdiction to entertain the petition and order partial termination where the trust estate, trustee, and all beneficiaries in being were before the court.
- The Court held that, with unanimous beneficiary consent, partial termination and acceleration are permissible unless continuation is required to serve a material purpose of the trust.
- The Court concluded no material purpose would be defeated and the agreement better carried out the donor’s objectives, including the charitable art-purchasing purpose.

## Legal Principles

- Vermont probate courts have continuing authority in the settlement and administration of estates that includes supervision of testamentary trusts, and they possess equitable powers to resolve trust-related matters arising in estate settlement.
- Beneficiaries may compel termination (in whole or in part) when all beneficiaries consent and continuation is not necessary to accomplish a material purpose of the settlor.
- Absent a spendthrift or other protective purpose requiring continued administration, courts may approve acceleration of remainder distributions when consistent with the dispositive plan and beneficial to the protected interests that justified postponement.
- Changed economic circumstances may be considered in determining whether accelerated distribution better effectuates the settlor’s charitable intent.

## Conclusion

The Vermont Supreme Court upheld a probate decree partially terminating a testamentary trust and accelerating a substantial distribution to a charitable remainderman because the probate court had authority over the trust and unanimous beneficiary consent, combined with the absence of any material purpose requiring continued administration, made the modification consistent with the settlor’s plan.


In re Bayley Tr., 127 Vt. 380, 250 A.2d 516 (1969)